Buy this home, get a free mortgage

When times are tough, landlords often offer a month’s free rent to lure tenants. Now a developer is taking a similar approach much further.

Maplewood Homebuilders recently rolled out what it calls the “no mortgage for one year program,” offered to qualified buyers who close on a select home in any of the company’s 11 communities in New Jersey.

“There are no balloon payments or push-off payments that turn it into a 31-year mortgage,” said Tom Jablonski, executive vice president of sales and marketing at
Maplewood.

At the company’s new 36-unit project, the Savoy at Rahway, two-bedroom condos start at $315,000. Homes at the Bergen Mills development in Monroe Township go for $1.1 to $1.2 million.

Under the plan, Maplewood opens an escrow account equal to 12 months of a buyer’s mortgage, including principal and interest. Maplewood then sends the homeowner a check every month in the amount of the mortgage payment.

Participants must pony up a 20 percent down payment and take their mortgage through Wells Fargo at a 30-year fixed rate not to exceed 6 percent, a limit that protects Maplewood against those with shaky credit.

“If you have a credit score in the 500s and can’t get a loan below, say, 8 percent, we feel that we don’t need to subsidize that,” said Jablonski.

“I’m seeing different incentives for buyers lately, from a free Lexus to free furniture to other upgrades,” said Manhattan real estate lawyer Neil Garfinkel. “New developers need to move product, and this is a glitzy way to get people in the door.”

Maplewood Homebuilders got into the business of distressed real estate last year after the new company acquired about 600 properties in central and southern New Jersey from Kara Homes, which filed for bankruptcy in 2006. Maplewood reopened 10 former Kara communities and is developing other properties of its own.

Marketing for Maplewood states that the offer would end March 31, but Jablonski is willing to let the deadline slide. And he said he’d be willing to let borrowers lock in a loan rate for projects that aren’t yet completed.

“You can’t ignore the headlines,” he said. “We have to get clever in what we offer. If someone wants a reduction in price or upgrades that equal the value of the mortgage payment, that’s fine, too.”